Paulraj et al 2015

J Bus Ethics (2017) 145:239–258
DOI 10.1007/s10551-015-2857-0
Motives and Performance Outcomes of Sustainable Supply Chain

Management Practices: A Multi-theoretical Perspective
Antony Paulraj1 • Injazz J. Chen2 • Constantin Blome3
Received: 17 September 2014 / Accepted: 14 September 2015 / Published online: 29 September 2015
Springer Science+Business Media Dordrecht 2015
Abstract Many researchers believe the tremendous outperform those primarily driven by amoral considera-
industrial development over the past two centuries is tions. Findings of this study contribute to multiple litera-
unsustainable because it has led to unintended ecological tures espousing sustainability management and can help
deterioration. Despite the ever-growing attention sustain- policy makers, stakeholder groups, and scholars develop
able supply-chain management (SSCM) has received, most more robust strategies for encouraging firms to practice
SSCM research and models look at the consequences, SSCM.
rather than the antecedents or motives of such responsible
practices. The few studies that explore corporate motives Keywords Motives Environmental sustainability
have remained largely qualitative, and large-scale empiri- Supply-chain management Firm performance
cal analyses are scarce. Drawing on multiple theories and
combining supply-chain and business ethics literature, we
purport that instrumental, relational, and moral motives are Introduction
behind a firm’s engagement in SSCM practices. Specifi-
cally, we examine the links between corporate motives, The remarkable industrial development of the last two
SSCM practices, and firm performance. Using a sample of centuries has resulted in tremendous prosperity (Shrivas-
259 supply-chain firms in Germany, we empirically test tava 1995). Many researchers believe such rapid develop-
five hypothesized relationships. Our results reveal that ment, however, is unsustainable as it has led to unintended
relational and moral motives are key drivers, and that firms ecological deterioration including industrial accidents,
exhibiting high levels of moral obligations tend to ozone depletion, and global warming. The recent global
economic crisis has also accelerated the need for sustain-
able growth because greener economy could create pros-
perity from better utilization of natural resources insofar as
& Antony Paulraj ‘‘to meet the needs of the present without compromising
antony.paulraj@manchester.ac.uk the ability of future generations to meet their own needs’’
Injazz J. Chen (WCED 1987).
i.chen@csuohio.edu For many environmental activists, the idea of sustain-
Constantin Blome able development appears to be an oxymoron since
C.Blome@sussex.ac.uk development seems to entail environmental degradation. In
1
Manchester Business School, University of Manchester, 3.56
the context of business, supply-chain managers must not
MBS West, Booth Street West, Manchester M15 6PB, UK only rethink their roles, but also reevaluate their actions as
2 supply-chain activities play a key role in a firm’s total
Department of Operations and Supply Chain Management,
College of Business Administration, Cleveland State environmental impact (Handfield et al. 2005; Isaksson et al.
University, Cleveland, OH 44115, USA 2010). In fact, companies today are under constant pressure
3
School of Business, Management and Economics, University as their stakeholders, including customers, regulatory
of Sussex, Falmer, Brighton BN1 9SL, UK bodies, NGOs, and even their own employees, are
123
240 A. Paulraj et al.
increasingly demanding the effective management of the Campbell 2007), a systematic empirical investigation
environmental impacts of their supply chains (Tate et al. remains scarce. Likewise, in the field of cleaner production
2010; Carter and Easton 2011). (e.g., Fresner 1998; Kjaerheim 2005), the motives and their
Sustainable supply-chain management (SSCM) com- effects on corporate performance have been largely
prises a firm’s internal practices, such as sustainable pro- unexplored.
duct and process design, as well as external practices, such Answering these questions can make several valuable
as supplier and customer collaboration, which are taken to contributions to the literature. Specifically, this paper
make its supply chain more sustainable in terms of all three examines what motivates a firm to engage in SSCM practices
dimensions of the triple bottom line (Pagell and Wu 2009; along with the impacts of the different motives and SSCM
Seuring and Muller 2008). However, to keep the study practices on the firm’s environmental as well as financial
parsimonious, we specifically focus on the environmental performances. Such an empirical investigation could help in
and economic dimension of sustainability in this paper. establishing the extent to which various motives contribute
However, if the raison d’être for business entities is to to firms’ engagement in SSCM. In addition, it would also
maximize shareholder wealth, then it does not come as a document the extent to which different motives and SSCM
surprise that firms would be driven to achieve this goal practices affect firms’ performance outcomes.
through actions that are even environmentally, socially, or
economically irresponsible as long as those actions can go
undetected (Campbell 2007). Examples of irresponsible Conceptual Framework and Hypotheses
acts such as poisoning the environment, deceiving cus-
tomers, exploiting employees, and skimping on product Following the famous essay ‘‘The social responsibility of
quality and safety throughout the supply chain have all business is to increase profit’’ (Friedman 1970), the con-
been well documented in the literature (e.g., Vogel 1992; ception and scope of CSR have been vividly discussed over
Roe 2003). On the other hand, while some corporations, in the past few decades including whether CSR has to be
their pursuit of profit, strive to benefit themselves at the purely altruistic or if it can be self-serving. Broadly
expenses of other stakeholders, many corporations go to defined, CSR may mean different things to different people
great lengths to do just the opposite (Campbell 2007; in different places and at different times. CSR behavior
Hoffman and Haigh 2011). This is in line with the notion of could mean (1) treating the community well with respect to
corporate social responsibility (CSR) that firms have a duty ensuring not to foul the ecosystem and natural environ-
to society that goes well beyond profit maximization, and ment, (2) treating employees well in terms of wages,
that firms should also engage in initiatives that benefit other benefits, gender/racial diversity, workplace safety, human
stakeholders even if those activities reduce firm profits rights, and making philanthropic contributions, (3) treating
(Swanson 1999; Paine 2002; Jennings 2013). It should be customers well in terms of product quality, truth in
noted that some scholars, however, have also argued that advertising, pricing, etc. Conceived as a company’s dis-
firms should not engage in CSR initiatives at the expense of cretionary involvement in business practices that further
profits (e.g., Davis 1973; Porter and Kramer 2006). economic, societal, and environmental well-being, CSR
In light of contrasting viewpoints, it is appealing to means all of the above to some contemporary scholars
explore why a firm would ever engage in sustainable (e.g., Du et al. 2011; Aguinis and Glavas 2012; Blome and
supply-chain management (SSCM), given the goal of profit Paulraj 2013; Vlachos et al. 2013).
maximization. Is it because SSCM can actually benefit the According to Carter and Easton (2011), the conceptu-
firm (instrumental motives) or is it because SSCM can help alization and management of environmental and social
address the interests of multiple stakeholders (relational issues has evolved from standalone approaches to the
motives)? And can firms be inspired to practice SSCM concept and practice of SSCM. It is important to note that
simply because they are convinced that it is the right thing SSCM, however, can be misused for symbolic green-
to do (moral motives)? What’s more intriguing would be to washing purposes that are not in line with the firm’s CSR
discern whether performance outcomes differ for firms (e.g., use of code of conducts that do not impact behavior,
practicing SSCM with different motives. For example, is publishing of sustainability reports that mirror performance
financial performance expected to be better for firms that that was not achieved) (Laufer 2003; Delmas and Burbano
are primarily motivated by self-serving interests? Do firms 2011; Parguel et al. 2011). Therefore, in this study, we
that follow moral motives perform worse than those whose target substantial SSCM actions that can contribute to the
acts are highly motivated by their economic self-interest? firm’s CSR, and, in doing so, we make certain that our
Although several conceptual papers have investigated the conceptualization of SSCM is in line with the notion of
conditions in which firms would go green or behave in CSR. For the sake of parsimony, we focus only on the
socially responsible ways (e.g., Bansal and Roth 2000; environmental aspects of SSCM practices.
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Motives and Performance Outcomes of Sustainable Supply Chain Management Practices… 241
In identifying the underlying dimensions of SSCM Roe 2003). On the other hand, many corporations would go
practices, an extensive review of the supply-chain literature great lengths to engage in socially responsible supply-chain
has directed our attention to both internal initiatives within activities such as reducing their environmental impact,
the focal firm and collaborative efforts with external sup- treating their workers and customers decently, and abiding
ply-chain partners. To improve sustainability performance, by the law (Seelos and Mair 2005; Campbell 2007; Wu and
special attention must be paid to product and process Pagell 2011). Furthermore, focal firms must also make sure
design that minimizes the negative environmental impacts that their supply-chain partners, including lower-tier sup-
of a firm’s products throughout their life cycles. Further- pliers, live up to their CSR standards. SSCM is hence a
more, as competition shifts from a firm to a supply-chain critical lynchpin as a firm cannot fulfill CSR standards
level, sustainable efforts across organizational boundaries unless its entire supply chain complies with the standards.
become essential. Grounded on extant literature, our SSCM
construct therefore incorporates four first order factors of
Sustainable Supply Chain Management Practices
sustainable product design, process design, and sustain-
and Competitive Advantage
ability collaboration with suppliers as well as customers
(Zhu and Sarkis 2004; Vachon and Klassen 2006; Carter
Some researchers have argued that socially responsible
and Easton 2011; De Giovanni 2012; Hoejmose and
initiatives, such as SSCM, can result in additional costs
Adrien-Kirby 2012; Morali and Searcy 2013; de Jong et al.
including setting up environmental friendly policies,
2014). The rationale and theoretical support for the four
employee training, and community development (e.g.,
key practices are further articulated in ‘‘SSCM Practices
McWilliams and Siegel 2001). These additional costs can
and Firm Performance’’ section.
then give firms a competitive disadvantage. In contrast, an
increasing number of studies have found environmental
Social Responsibility and Sustainable Supply Chain responsiveness to be positively related to firm performance,
Management Practices because green supply-chain practices can help boost
employee morale, enhance customer goodwill, and
As the nature of many business relations is changing from improve relationships with stakeholders like (1) govern-
firms producing goods within wholly owned facilities to ment agencies which reduce regulatory costs and (2)
firms engaging in supply chains partners, the notion of CSR investors which lead to increased investment in these firms
is also transforming. No longer is CSR the domain of an (McGuire et al. 1988; Arya and Zhang 2009; Sarkis et al.
individual firm; it is the purview of supply chains (An- 2011).
dersen and Skjoett-Larsen 2009). As such, media and SSCM practices can also result in improved brand image
activists have become adept at holding supply-chain and firm reputation among stakeholders (Maigman and
organizations responsible for their environmental impact, Ferrell 2004). A valuable complement to a differentiation
even if the impact is caused by their supply-chain partners. strategy, a strategic CSR implementation of SSCM
SSCM practices have thus been pushed further and further enhances the value of a firm’s reputation and its brand,
to the forefront. The proliferation of social media, due in thereby contributing to the firm’s sustainable competitive
part to globalization and the expansion of information and advantage (McWilliams and Siegel 2011). According to the
communication technologies, has multiplied the reach of tenets of resource-based view (RBV), a positive reputation
activists. Worse yet, activists and media may target the among stakeholders can be a source of competitive
most successful or visible corporations to draw attention to advantage that leads to improved firm performance (Bar-
issue, even if those firms in fact may not have much impact ney 2012). Drawing on the dynamic capabilities of the
on the problem at hand. For example, Nestlé, the world’s firm, a substream of the RBV, researchers advise that the
largest supplier of bottled water, has been targeted for its green supplier management capabilities embedded in
access to fresh water, even though its bottled water sales SSCM practices are a critical source of competitive
consume just 0.0008 % of the world’s fresh water supply, advantage, as these capabilities are path dependent and
compared to the inefficient agricultural irrigation, which particularly valuable when supply-chain organizations are
uses 70 % of the world’s water supply each year (Porter receptive to external stakeholder pressure (Reuter et al.
and Kramer 2006). 2010). Furthermore, in a rigorous meta-analysis of the
Reports of firms that exhibit environmentally or socially relationships among environmental responsiveness, social
irresponsible behavior have not been lacking. These ‘‘un- responsiveness, and corporate financial performance,
sustainable’’ supply-chain practices consist of harming the researchers have found that environmental responsiveness
environment, cheating the government, exploiting tends to be associated with better corporate financial per-
employees, and deceiving customers (e.g., Vogel 1992; formance (Orlitzky et al. 2003).
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Conceptual Model and Hypotheses Instrumental Motives and SSCM Practices
The organizational justice literature has recently witnessed Corporate social responsibility theorists have asserted that
a move from models focusing on instrumental motives to firms will engage in responsible initiatives such as SSCM
models that consider principled moral motives of organi- when these practices align with their instrumental interests
zational actors (Cropanzano et al. 2003). Based on the of enhancing shareholder value (Reinhardt et al. 2008),
tenets of multiple needs theory, researchers have proposed preempting bad publicity, and increasing firm competi-
a more powerful framework including morality-based tiveness, such as by protecting a firm’s reputation (Bansal
motives to allow for simultaneous investigation of the and Clelland 2004; McWilliams and Siegel 2011) and
complex network of factors. Grounded on the extant lit- profitability so that managers can raise their compensation
erature (e.g., Aguilera et al. 2007), this study purports that packages, which are usually tied to profitability (Aguilera
there are three motives that could drive firms to pursue et al. 2007).
SSCM practices: instrumental (driven by self-interest), To the extent that self-interest is generally the first and
relational (concerned with relationships among group the foremost motive, several researchers contend that firms
members), and moral (concerned with ethical standards should focus on environmental practices that are good for
and moral principles). When examined from the purview of economic performance (e.g., Carter and Rogers 2008), and
business ethics literature, these three motives are grounded that if a practice has a negative impact on economic per-
on various fundamental conceptions of business ethics that formance, it is not sustainable regardless how beneficial it
focus on moral actions: ethical egoism, utilitarianism, and is for the environment (Siegel 2009). In fact, in the extant
virtue ethics. Ethical egoism is a normative theory in which SSCM literature, there is broad and implicit acceptance
the main assumption of which is that an action is ethical if that profits are the ultimate gage of supply-chain perfor-
its consequences benefit the doer, whereas in utilitarianism, mance, prompting some researchers to go so far as arguing
the doer should treat oneself with no higher regard than that the question of ‘‘does sustainability pay?’’ is the wrong
others. Furthermore, the central view of utilitarianism is question moving forward, and thus ‘‘research in sustainable
that moral action should maximize the sum of utility (often supply chain management should have no future’’ (Pagell
defined as happiness) for those affected by the action (Mill and Shevchenko 2014). The prevalence and dominance of
2007). Contrary to consequential theories of egoism and the instrumental motives for SSCM practices seems
utilitarianism that determine morality based on the out- undoubtedly undeniable.
comes of actions, virtue ethics centers on the character and In light of business ethics, instrumental motives repre-
virtues of subjects which influence their behavior (Hurst- sent a type of consequentialism, wherein responsibility is
house 2013). According to this theory, a person is morally determined solely based on the weighing of the conse-
good if this person possesses certain virtues like honesty or quences of actions (Anscombe 1958). If the positive con-
compassion. Thus, in virtue ethics, the focus is on ‘‘being’’ sequences of actions are greater than the negative
instead of ‘‘doing.’’ Certainly, none of these moral theories consequences, then the actions are favorable and morally
can claim to be the ‘‘right’’ moral theory, and it is not our proper. One central form of consequentialism is ethical
intention to prejudge any of these theories to be dominant egoism. Under the ethical egoism assumption, SSCM
over others. practices would be favored if there is a net positive benefit
Figure 1 depicts our conceptual model linking the three for the focal firm.
motives with SSCM practices and firm performance. First, Positive benefits of SSCM initiatives can influence the
grounded on CSR and business ethics, this model rests on willingness of managers to implement such practices.
the premise that firms engage in responsible initiatives like When firms design products and processes following sus-
SSCM practices with various extrinsic and intrinsic tainability guidelines, they might trim cost by reducing
motives. According to collaborative advantage (Kanter waste of materials and energy. Apart from generating extra
1994; Dyer 2000) and relational view (Dyer and Singh investments from shareholders, firms might also expect
1998; Chen et al. 2004), these SSCM practices, including SSCM to enhance employee morale, external publicity, and
product and process innovations (Isaksson et al. 2010) and goodwill. Even though we do not claim that SSCM prac-
collaboration with supply-chain partners, can then become tices guarantee additional benefits, firms with self-serving
a set of dynamic capabilities. Since these capabilities are motives may adopt SSCM to fulfill their instrumental
socially created, complex, path dependent, and difficult to motivations. Given the dispersed and complex nature of
imitate, they can be a source of competitive advantage that today’s supply chains, firms will also need to collaborate
leads to improved firm performance. with suppliers and customers to achieve their instrumental
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Sustainable Sustainable Supply-side Demand-side

product process sustainability sustainability
design design collaboration collaboration
Instrumental
Motives
H1
Environmental
H4 Performance
H2 Sustainable Supply
Relational Chain Management
Motives (SSCM) Practices H5
H3 Financial
Performance
Moral
Motives
Fig. 1 A proposed model of SSCM motives and performance
goals. As a supply chain can never be more sustainable legitimacy to survive. Legitimacy is a relational motive
than its weakest link, firms cannot consistently generate since it concerns with how a firm’s actions are perceived by
economic gains unless they align sustainable practices with others. Thus, firms in a given industry have relational
the entire supply chain through proper external collabora- motives to practice SSCM so as to be seen as legitimate by
tions (Blome et al. 2014). complying with stakeholder norms (Aguilera et al. 2007).
In summary, self-interest-driven instrumental motives as Relational motives reflect business ethics that starkly
a key driver for organizational SSCM efforts are collec- contrast with the ethical underpinnings of instrumental
tively supported by the extant SSCM literature and the motives or ethical egoism and instead follow the theory of
basis of ethical egoism. Thus, we propose the following utilitarianism. According to utilitarianism, actors should
hypothesis: decide on the action that produces the most good. There-
fore, firms should be attuned to promoting the interests of
H1 Instrumental motives will likely have a positive effect
different stakeholders such as customers (e.g., offering
on a firm’s SSCM practices.
environmentally friendly products), suppliers (e.g., using
nontoxic materials), employees (e.g., providing environ-
Relational Motives and SSCM Practices mental training), and government and environment groups
(e.g., reducing noncompliance), and not merely seek short-
An organization’s relational motives for responsible efforts term shareholder returns (Aguilera et al. 2007; Sarkis et al.
such as SSCM practices can be observed through the lens 2010). Since governments, employees, and activist groups
of a stakeholder theory of the firm (Freeman 1984; are also important in SSCM, firms’ reactive responses to
Clarkson 1995; Rowley and Moldoveanu 2003; Eesley and these stakeholders have been amply documented in the
Lenox 2006). Accounting for the diversity of stakeholder literature (e.g., Buysse and Verbeke 2003; Delmas and
interests (not just shareholder interests), stakeholder theory Toffel 2008). Therefore, in this study, we focus our
posits that firms will act to make certain the well-being of attention on a firm’s proactive sustainability responses to
the different groups engaged in a relationship with the firm. customers and competitors, the two most dominant players.
In the context of SSCM practices, a supply-chain organi- Examining how external pressures influence a firm to
zation often has to meet the needs and demands of its adopt organizational practices, institutional theory suggests
diverse stakeholders who might have little interest in the that, in addition to the coercive pressures mentioned above,
organization’s economic performance. Furthermore, since normative and mimetic are two other forms of isomorphic
corporations are embedded in a broad set of economic and drivers (DiMaggio and Powell 1983; Scott 1994). Social
political institutions, they need to establish social requirements from the customer base and market and their
123
growing environmental expectation can form the primary embedded with moral complexity (Fernando and Almeida
normative pressure for firms to practice SSCM. When 2012). Moral motives for corporate sustainability are
consumers share common environmental concerns, are anchored in the notion that businesses have an ethical duty to
organized in networks, and have the capacity to influence make a positive contribution to the environment and society
corporate image in the name of society’s collective good, and create a better world for the future (Hahn and Scheer-
they are likely to push the firm to engage in SSCM (Lee messer 2006; Bronn and Vidaver-Cohen 2009). Thus, moral
and Klassen 2008). Furthermore, supply-chain organiza- motives differ from relational motives in that morally
tions may also be pressed to mimic or follow the actions of inspired supply-chain firms practice SSCM due to their
successful competitors so as to catch up with or surpass the intrinsic higher-order values and/or genuine concern for the
competition (Corbett 2006; Sarkis et al. 2011; Hofer et al. environment, but not because of the need to fend off external
2012). Imitation plays a considerable role for firms in pressures or to appease multiple stakeholders (i.e., extrinsic
developed countries such as Canada, France, and Germany motives). An intrinsic motivation is the will to adhere to a
(Aerts et al. 2006) as well as in developing countries such certain moral norm because it is desirable for itself; it is an
as China (Zhu et al. 2013) when it comes to implementing end in itself. An extrinsic motivation, by contrast, is the will
SSCM-related practices. A recent thematic analysis on to perform a certain act or to obey a norm so as to realize
corporate CSR reports of select top 100 global companies another end (i.e., goods of second intent).
also reveals that competitive pressure is the foremost As stated above, deontological ethics posits that firms
driving force behind environmental strategy development indeed have duties and moral obligations to act responsibly.
(Tate et al. 2010). More specifically, Graafland and Van De Ven (2006) state
With the ever growing savvy of customers, companies that many companies have a business culture committed to
that create and deliver value to customers through the pro- certain principles that hold sustainability initiatives to be a
vision of ‘‘more sustainable’’ products stand to benefit con- moral ‘‘duty’’ of the firm. Since SSCM practices or projects
siderably. To the extent that firms would pursue SSCM may prove costly to a firm, the firm may choose not to engage
practices to maximize the utility of stakeholders, firms must in environmental stewardship if it does not have a strong
give priority to the needs and wants of their customers. In sense of moral ‘‘duty,’’ because economic benefit is not
doing so, firms can enhance their customer base. In addition, imminent. Therefore, Etzioni (1988) argues that the deon-
differentiation from competition—from a customer’s view- tological motive is more essential than economic motive in
point—will also improve, thereby jointly leading to sus- the continued pursuit of corporate sustainability, especially
tainable competitive advantage (Gulati 2007; Lado et al. in times of economic hardship.
2011). Scholars have extolled the virtues of customer focus Consistent with extant literature (Etzioni 1988; Carroll
as it provides a basis for developing and fostering supply- 1991; Graafland and Van De Ven 2006; Aguilera et al.
chain relational capabilities including collaboration with 2007), moral motives in this paper reflect not only deon-
supply-chain partners in order to create and deliver strategic tological ethics (Bowie 1999) but also virtue ethics
value to customers and other stakeholders (Chen et al. 2004; (Solomon 1992). Organizational virtuousness scholars
Kahn et al. 2006). In light of stakeholder interests and have suggested that some virtuous firms choose to engage
competitive pressures, we propose the following: in responsible initiatives such as SSCM practices simply
because it is the right thing to do, a moral motive, irre-
H2 Relational motives will likely have a positive effect
spective of reciprocity or self-interest, and that virtuous-
on a firm’s SSCM practices.
ness does not stand in opposition to concepts of social
responsibility, or citizenship, or ethics, but rather it extends
Moral Motives and SSCM Practices beyond them (Cameron et al. 2004; Bright et al. 2006).
Specifically, virtuousness could lead to better care for the
So far, our review and discussion on extant SSCM litera- environment because (1) classical interpersonal virtues
ture suggest that engagement in SSCM practices are initi- such as benevolence or loyalty might be extended to the
ated to acquire benefit to the firm or as a result of a environment and nonhuman beings to maintain biodiver-
reciprocity arrangement (e.g., to attain a positive reputa- sity (Cafaro and Sandler 2005; Hull 2005; Sandler 2009),
tion), and not due to higher-order values. Scholars in and (2) ‘‘protecting’’ or ‘‘not-exploiting’’ the environment
business ethics and organizational justice, however, advo- might lead to ‘‘eudemonia’’ due to the harmonious rela-
cate that in addition to the instrumental and relational tionship with the environment (Bina and Vaz 2011). Fol-
motives, morality-based motives play a critical role in the lowing this theory and taking the stance that supply-chain
actions taken by supply-chain organizations (Carroll 1991; managers have a moral ‘‘duty’’ to proactively question how
Aguilera et al. 2007), and that every aspect of value cre- their actions impinge on the stability and integrity of the
ation within business, a deeply human institution, is supply-chain ecosystem, organizational environmental
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virtuousness integrates the notion of environmental man- protecting the environment is the ‘‘right thing to do’’ will
agement and organizational virtuousness to engender a act accordingly. Therefore, we posit
positive means of self-regulation by which organizations
H3 Moral motives will likely have a positive effect on a
may engage in SSCM practices (Hoffman and Haigh 2011;
firm’s SSCM practices.
Sadler-Smith 2013).
Empirical evidence confirms that most individuals are
concerned with justice and fairness, even when there is no SSCM Practices and Firm Performance
apparent economic benefit for doing so, and that this
morality-based concern for justice drives their interactions SSCM practices encompass sustainable product design,
with the moral actions of the firm (Turillo et al. 2002; process design, and close sustainability collaboration with
Cropanzano et al. 2003). Also, within supply chains, the suppliers as well as customers (Zhu and Sarkis 2004;
concepts of justice and fairness have been shown to impact Vachon and Klassen 2006; Drake and Schlachter 2008;
SSCM practices significantly (Vachon and Mao 2008). More Hollos et al. 2012; Gimenez and Sierra 2013; Morali and
specifically, stewardship theory suggests that organizational Searcy 2013). To start, products should be designed with
actors like supply-chain managers bring their personal eco-friendly raw materials and component parts in mind
morality-based values, which may go beyond economic self- (Rao and Holt 2005). Next, easy disassembly incorporated
interests, to the firm (Davis et al. 1997). When supply-chain in product design is crucial for reuse and recycle. Further,
managers feel responsible to the environment and behave for products that are to be disposed of at the end of their
according to stewardship interests by instigating actions, useful life, biodegradable and recyclable materials are key
driven by moral motives, toward a better society, they are to environmental performance (Carter and Easton 2011;
likely to inject SSCM practices in their firm strategies Zhu et al. 2012). Coupled with sustainable product design,
(Logsdon and Wood 2002; Cantor et al. 2012). For instance, a supply-chain organization’s process design and innova-
management and employees at Subaru of Indiana Automo- tion aimed at reducing air pollution, solid/effluent waste
tive (SIA) plant share a sense of commitment to the scarce (Rao and Holt 2005; De Giovanni 2012; Narasimhan and
resources and environment, and subsequently became the Schoenherr 2012), and energy and resource consumption
first zero-landfill car factory in the U.S. (Farzad 2011). (Wong et al. 2012) can have a significant impact on the
Meticulously reducing waste using the Kaizen principle firm’s sustainability performance.
before recycling 98 % of the plant’s waste and incinerating Customers are increasingly holding a supply-chain
the remaining 2 % to sell power back to the grid has allowed organization responsible for environmental negligence
SIA to actuate its concerns for environmental sustainabil- even if its suppliers are at fault. A firm, therefore, needs to
ity—moral motives—and save millions of dollars a year. educate and, in many cases, help its suppliers in setting up
In summary, moral motives are concerned with what green supply-chain practices (Rao and Holt 2005; Hoej-
Aristotle labeled goods of first intent, chosen for their own mose and Adrien-Kirby 2012; Shi et al. 2012), insist that its
sake, as opposed to goods of second intent, such as profit, suppliers provide eco-friendly material and parts (Carter
reputation or power, which have instrumental (egoism) or et al. 2000; Zailani et al. 2012), and require its suppliers to
relational (utilitarianism) positions. With a belief that ‘‘the implement environment management system (EMS) and/or
ends justify the means’’ in utilitarianism, some actions are secure ISO 14001 certification (De Giovanni 2012; de Jong
acceptable despite being immoral or unethical in their own et al. 2014). Finally, upholding strong interorganizational
right. Furthermore, with utility as the sole moral good in collaboration with customers and suppliers has been found
utilitarianism, the principle of utility may come into conflict to result in improved environmental performance (Geffen
with that of justice (Tsalikis and Fritzsche 1989). Unlike and Rothenberg 2000; Vachon 2007; Drake and Schlachter
utilitarianism, the rightness of an action is a key concern of 2008; Gimenez and Sierra 2013; Morali and Searcy 2013),
virtue ethics or organizational virtuousness, which accen- and provide formal and informal mechanism that promote
tuates the virtues, or moral character. Also in stark contrast trust, reduce risk, and in turn increase profitability (Dyer
with utilitarianism, deontological ethics, as a nonconse- and Singh 1998; Chen and Paulraj 2004).
quential theory, embraces the concept of ‘‘good will’’ Extant literature at the nexus between SSCM practices
including adherence to duties and obligations in ethical and firm performance, especially the financial outcome,
decision-making. over the past two decades has been mixed, if not contra-
Collectively, these research streams lead us to conjec- dictory. Earlier studies found that managers are generally
ture that as firms learn good habits of character (e.g., reluctant to invest in SSCM because of the cost involved
feeling responsible for the environment), they are likely to and the uncertain benefits that can be gained (Orsato 2006;
incorporate such virtues into their practices. Managers with Curkovic and Sroufe 2007), and that investments in sus-
a genuine concern for the environment or who believe that tainable supply-chain practices is a zero-sum game,
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reducing profitability by an equal amount (Pagell et al. 5-point Likert scale with anchors ‘‘strongly disagree’’ and
2004). A more encouraging perspective is that SSCM ‘‘strongly agree’’ was used for all nonperformance-related
practices may lead to a decline in short-term profit (Bowen (i.e., motives and SSCM practices) indicators. In case of
et al. 2001; Zhu et al. 2012), but can result in long-term performance measure, we used a 5-point Likert scale with
competitive advantage (Krause et al. 2009). The most anchors ‘‘decreased significantly’’ and ‘‘increased signifi-
promising view is that SSCM practices are positively cantly.’’ In addition, for performance indicators, we
related to an organization’s environmental and financial instructed the respondents to indicate changes in the per-
performances as part of ‘‘win–win’’ propositions (Mon- formance measures over the past 2–3 years (Paulraj et al.
tabon et al. 2007; Wong et al. 2012), although critics 2008). Since the initial survey instrument was designed in
challenge the idea of win–win solutions and argue that English and eventually translated to German, we adopted a
firms are required to deal with the tradeoffs (Seuring and rigorous translation/back-translation process to ensure that
Muller 2008; Hahn et al. 2010; Winn et al. 2012). the scales were consistent. In addition, we conducted face-
General analysis on the link of business ethics/CSR and to-face discussion with supply-chain academic researchers
performance mirrors the mixed findings mentioned above, as well as German practitioners to review the questionnaire
even though many studies find a positive link (Pava and and provide us with feedback. Subsequently, we made
Krausz 1996). From an ethical point of view, firms might minor modifications to the instrument to enhance clarity
benefit financially when their responsible initiatives are and appropriateness of the measures.
more aligned with societal expectations as they gain
legitimacy (Palazzo and Scherer 2006), retain motivated
employees (Rodrigo and Arenas 2008), incur fewer nega- Data Collection
tive events (Husted 2005), and attract more customers and
funds (Hill et al. 2007), which all might outweigh the initial Supply-chain management executives were selected as
costs incurred for socially responsible activities. potential respondents to our survey. We derived the initial
As discussed above, empirical research investigating the sample of 1400 German firms from the Dun & Bradstreet
relationships between environmentally sustainable initia- database. This sample included industries within SIC codes
tives and firm performance has resulted in disparate and, to covering 31–33 and 47–49 since they were considered to
some extent, contradictory findings. While many studies be of primal importance to Germany. Surprisingly, we
have attempted to answer the question of ‘‘does it pay to be found the contact details in the initial sample to be quite
green?’’ and a subsequent meta-analysis of these studies outdated. Accordingly, we used supply chain and sourcing
conclude that it does pay to be green (Golicic and Smith groups within business-related social networks such as
2013), some researchers maintain that firms often have no LinkedIn and Zing to find appropriate contacts within these
choice but to adopt sustainable supply-chain practices even 1400 sample firms. These social network-based groups also
though such practices may have uncertain or even negative helped us in contacting a high percentage of senior exec-
impacts on their performance (e.g., Hahn et al. 2010; Winn utives within the initial sampling frame.
et al. 2012). Furthermore, several recent studies imply that We adopted a modified version of Dillman’s (2007) total
SSCM practices do not directly affect firm performance, design method. Specifically, we sent multiple reminder
but can improve it indirectly (Pullman et al. 2009; De emails and followed them up with telephone calls. We
Giovanni 2012; Zhu et al. 2013). In light of the mixed and received a total of 259 responses, representing a response
inconclusive findings, we put forth the following rate of 18.5 %, which is comparable to recent research
hypotheses. within the broad area of supply chain management.
Demographic details of our final sample, including indus-
H4 SSCM practices are likely to be positively associated
tries, firm size, job level and function of respondents, are
with a firm’s environmental performance.
presented in Table 1. Since our survey covered both firm-
H5 SSCM practices are likely to be positively associated level and supply-chain collaboration practices, we took
with a firm’s financial performance. additional steps to ensure that the respondents were
appropriate and competent to answer the survey questions.
With this ambition, we included two questions focusing on
Methodology (1) the respondent’s knowledge on the topics covered and
(2) confidence in filling up the survey instrument. The
Survey Instrument average for knowledge and confidence was 3.64 and 3.48,
respectively, on a 5-point Likert scale (1—‘not at all’ and
All theoretical constructs were measured using indicators 5—‘significantly’). In addition, around 56 % of the
that were adapted from extant SSCM and CSR literature. A respondents held senior positions (president, vice president
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Table 1 Company and respondent profile sustainability regulations, (c) differentiate from competitors,
Description SIC Code Percent
and (d) gain competitive advantage (Buysse and Verbeke
2003; Aguilera et al. 2007; Delmas and Toffel 2008; Seuring
Manufacturing 31–33 73.1 and Muller 2008; Tate et al. 2010; Sarkis et al. 2011; Hofer
Transportation, Communications, 47–49 14.6 et al. 2012). The construct ‘‘moral motives’’ was measured
Electric, Gas & Sanitary Services by indicators reflecting firms’ intent to practice SSCM due to
Other Industries 12.3 (a) genuine concern for the environment, (b) a sense of
Description Percent responsibility to the environment, and (c) top management
belief (Logsdon and Wood 2002; Cameron et al. 2004;
\250 employees 17.7
Aguilera et al. 2007; Cantor et al. 2012).
250—1000 employees 22.0
The indicators measuring ‘‘sustainable product design’’
1001—10,000 employees 32.5
assessed the extent to which firms incorporate sustainability
10,001—50,000 employees 17.7
guidelines including reduce, reuse, recycle, and/or recovery
[50,000 employees 10.1
when designing products (Zhu and Sarkis 2004; Carter and
Job level Percent Easton 2011; Zhu et al. 2012). The construct ‘‘sustainable
process design’’ included indicators measuring the extent to
CEO 8.2 which firms design their processes to be environmentally
Vice President 33.3 friendly (Zhu and Sarkis 2004; Rao and Holt 2005; De
Director 15.0 Giovanni 2012; Narasimhan and Schoenherr 2012; Wong
Senior Manager 16.3 et al. 2012). ‘‘Supply-side sustainability collaboration’’
Manager 27.2 included indicators that measure the extent to which the
responding firm cooperates with its suppliers to achieve
sustainability objectives as well as provides suppliers with
requirements, materials, equipment, services, and feedback
and director), indicating that we have included key to support its sustainability goals (Carter et al. 2000; Rao
respondents that are appropriate for our survey. and Holt 2005; Vachon and Klassen 2006; Hoejmose and
Although the survey instrument included indicators Adrien-Kirby 2012; Shi et al. 2012; Zailani et al. 2012; Zhu
grounded in the extant literature, we conducted the q-sort et al. 2012). Along similar lines, the construct of ‘‘demand-
approach not only to ensure that these indicators are side sustainability collaboration’’ includes indicators that
appropriate within our context, but also to increase prere- capture the extent to which the buying firm cooperates and
sponse reliability of the adopted indicators. For this pur- jointly plans with its customers to achieve the sustainability
pose, we used a team of eight supply-chain management goals (Vachon and Klassen 2006, 2008).
researchers and practitioners to assess interrater reliability As for performance factors, ‘‘environmental perfor-
suggested by Perreault and Leigh (1989) that measures the mance’’ included indicators measuring the firm’s ability to
proportion of agreement between all judge pairs. Extant (a) reduce energy, pollution, and waste; (b) decrease con-
research suggests that the proportion of interjudge agree- sumption of natural resources and hazardous materials; and
ment must be over 65 % to be considered accept- (c) decrease environmental accidents (Zhu and Sarkis
able (Moore and Benbasat 1991; Stratman and Roth 2002). 2004; De Giovanni 2012; Zhu et al. 2013). Finally, ‘‘fi-
We achieved a final score of 81.1 %, suggesting that the nancial performance’’ included items measuring the change
indicators were appropriate and reliable. The indicators for in (a) return on assets, (b) net income before tax (EBIT),
measuring the various theoretical constructs and perfor- and (c) profit as percentage of sales (Chen and Paulraj
mance outcomes are included in Tables 2 and 3. 2004; Ameer and Othman 2012).
Measures Nonresponse Bias
The construct ‘‘instrumental motives’’ measured the extent We assessed nonresponse bias by comparing early and late
to which firms engage in SSCM so as to (a) satisfy demand respondents (Armstrong and Overton 1977). Specifically,
for sustainability improvement, (b) avoid poor publicity, we looked at the survey submission date and split our
(c) appease shareholders, and (d) achieving short-term and sample into the two groups: the ‘‘early’’ group included
long-term profitabilities (Bansal and Clelland 2004; Rein- 129 responses, while the ‘‘late’’ group included 130
hardt et al. 2008; McWilliams and Siegel 2011). Items responses. We compared the two groups using firm-size as
measuring ‘‘relational motives’’ mirror the extent to which well as 10 randomly selected indicators from our survey
firms practice SSCM to (a) increase customer base, (b) meet instrument. These group comparisons did not reveal any
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Table 2 Measurement model for motives and SSCM factors

Indicator Principal componentb Measurement model
factor loading
(Eigen value, Cronbach’s alpha, composite reliability, average variance extracted) Std. t -valuec
coefficient
Instrumental motives (Eigen value = 1.85; a = 0.63; CR = 0.66; AVE = 0.42)

We engage in sustainable activities …
Due to the shareholders demand for sustainability improvements 0.73 0.58 –
In order to avoid poor publicity 0.68 0.49 5.60
In order to appease our shareholders 0.83 0.81 5.57
a
For short-term profitability
In order to achieve long-term profitabilitya
Relational motives (Eigen value = 2.45; a = 0.85; CR = 0.86; AVE = 0.68)
In order to increase our customer base 0.81 0.69 –
In order to differentiate us from our competitors 0.85 0.85 12.04
As it is a source of sustained competitive advantage 0.87 0.90 12.24
Primarily due to sustainability regulationa
Moral motives (Eigen value = 3.12; a = 0.87; CR = 0.88; AVE = 0.65)
Because we feel responsibility to the environment 0.87 0.88 –
Because of genuine concern for the environment 0.80 0.84 16.96
As top management considers environmental responsiveness as a vital part of corporate 0.70 0.69 12.44
strategy
Because it is the right thing to do 0.75 0.79 15.39
Sustainable product design (Eigen value = 3.40; a = 0.85; CR = 0.85; AVE = 0.53)
When designing products, we pay attention to reduced consumption of material/energy 0.66 0.70 –
When designing products, we pay attention to reuse, recycle, and/or recovery of material 0.74 0.79 11.38
We design our products to use environmentally friendly materials 0.76 0.84 11.86
We design our products with standardized components to facilitate reuse 0.77 0.69 10.11
We design our products for easy disassembly 0.70 0.61 8.93
We use life cycle analysis to evaluate the environmental impacts of our productsa
We have formal guidelines for environmental product designa
Sustainable process design (Eigen value = 2.52; a = 0.89; CR = 0.90; AVE = 0.69)
The design of our processes is heavily dependent on sustainability goals 0.65 0.81 –
We evaluate our existing processes to reduce their impact on the environment 0.82 0.82 14.86
We have formal design for environment guidelines for process design 0.67 0.77 13.80
We constantly reengineer our processes to reduce their environmental impact 0.63 0.88 16.30
We improve the environmental-friendliness of our productiona
Supply-side sustainability collaboration (Eigen value = 4.68; a = 0.93; CR = 0.93; AVE = 0.68)
We cooperate with our suppliers to achieve sustainability objectives 0.72 0.80 –
We provide our suppliers with sustainability requirements for their processes 0.71 0.82 14.60
We collaborate with our suppliers to provide products and/or services that support our 0.76 0.82 20.53
sustainability goals
We develop a mutual understanding of responsibilities regarding sustainability performance 0.85 0.85 15.79
with our suppliers
We conduct joint planning to anticipate and resolve sustainability-related problems with our 0.77 0.88 16.32
suppliers
We periodically provide suppliers with feedback about their sustainability performance 0.80 0.78 14.12
Demand-side sustainability collaboration (Eigen value = 4.06; a = 0.94; CR = 0.94; AVE = 0.76)
We cooperate with our customers to achieve sustainability objectives 0.85 0.87 –
We cooperate with our customers to improve their sustainability initiatives 0.86 0.86 25.05
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Table 2 continued
Indicator Principal componentb Measurement model
factor loading
(Eigen value, Cronbach’s alpha, composite reliability, average variance extracted) Std. t -valuec
coefficient
We collaborate with our customers to provide products and/or services that support our 0.79 0.87 18.98
sustainability goals
We develop a mutual understanding of responsibilities regarding sustainability 0.79 0.90 20.02
performance with our customers
We conduct joint planning to anticipate and resolve sustainability-related problems with 0.71 0.83 17.44
our customers
Model Fit Indices: Normed Chi Square = 2.36 (B3.0); Non-Normed Fit Index = 0.96 (C0.90); Comparative Fit Index = 0.97 (C0.90); Root
Mean Square Residual = 0.07 (B 0.08); Root Mean Square Error of Approximation = 0.07 (B0.08)
a
Items dropped during instrument development process
b
EFA total variance explained is 74 %
c
All t-values are significant at p \ 0.01 level
Table 3 Measurement model for performance factors

Indicator Principal componenta Measurement Model
factor loading
(Eigen value, Cronbach’s alpha, composite reliability, average variance extracted) Std. coefficient t-valueb
Environmental performance (Eigen value = 3.48; a = 0.85; CR = 0.86; AVE = 0.52)

Reduction in air pollution 0.75 0.75 –
Reduction in waste (water and/or solid) 0.81 0.82 11.49
Decrease in consumption of hazardous/harmful/toxic materials 0.75 0.70 10.01
Decrease in frequency for environmental accidents 0.70 0.60 8.58
Increase in energy saved due to conservation and efficiency improvements 0.75 0.66 9.35
Decrease in use of natural resources 0.78 0.65 9.41
Financial performance (Eigen value = 2.49; a = 0.88; CR = 0.89; AVE = 0.73)
Return on Assets 0.83 0.74 –
Firm’s net income before tax (EBIT) 0.93 0.92 13.52
Profit as percentage of sales 0.92 0.89 13.40
Model Fit Indices: Normed Chi Square = 1.96 (B3.0); Non-Normed Fit Index = 0.97 (C0.90); Comparative Fit Index = 0.98 (C0.90); Root
Mean Square Residual = 0.04 (B0.08); Root Mean Square Error of Approximation = 0.07 (B0.08)
a
EFA total variance explained is 66 %
b
All t-values are significant at p \ 0.01 level
differences at the 95 % confidence level. In addition, we procedural approaches, we eliminated bias due to com-
compared our final sample with 350 randomly selected monalities by anchoring the indicators measuring inde-
nonrespondents using demographic variables such as pendent and dependent constructs using different scale
annual sales volume and the number of employees. These endpoints. We used the Harman’s single-factor test to
group comparison tests also pointed to no difference assess CMV (Podsakoff et al. 2003). This exploratory
between the respondents and nonrespondents (p \ 0.05). factor analysis (EFA) resulted in ten factors with
Based on these results, we conclude that nonresponse bias eigenvalues greater than 1.0. In addition, while 74.63 %
is not a concern. of the total variance was explained by these six factors,
the first factor accounted for only 30.51 % of the vari-
Common Method Variance ance. Using confirmatory factor analysis (CFA), we
found the single factor model to exhibit significantly
Common method variance (CMV) was addressed through worse fit than our six factor model. We also conducted
procedural as well as methodological approaches. As for the Widaman (1985) approach as an additional test of
123
CMV, which compares a model including only the traits instrumental motives, were greater than 0.70, indicating
(theoretical factors) to another model that also includes a that the constructs are reliable as well. Since the values for
method factor along with the traits (Podsakoff et al. instrumental motives were greater than 0.60 and given that
2003). When compared to the first model, the fit for the we adapted the indicators for this construct from past
second model was the same in terms of NNFI and CFI. research, these values were deemed acceptable. In addition,
However, the method factor explained only 2 % of the all constructs except for instrumental motives had an AVE
total variance (Williams et al. 1989). In summary, based value greater than 0.50. Although the reliability assessment
on these results, we can safely conclude that CMV is not for instrumental motives was not completely satisfactory,
a concern. we decided to retain this construct as it forms an integral
part of our operationalization of sustainability motivations.
Measurement Instrument Development Alternatively, we were able to improve the reliability of
this construct by eliminating the second indicator, but we
First, we conducted specific tests to assess the assumption decided to keep this indicator as its elimination will reduce
of normality, constant variance, and the existence of out- the total number of indicators to below three.
liers. We tested for multivariate normality using the Mar-
dia’s (1970) test. For our entire dataset, the Mardia Hypothesis Tests
coefficient was found to be only 1.15. Since this is well
within the recommended limits of -1.96 and 1.96, we can We tested the five hypotheses by the structural equation
safely conclude that our data satisfy the assumptions of modeling approach. The widely recommended method of
multivariate normality. In addition, given that none of the maximum likelihood was utilized to estimate the model
plots and statistics indicated any significant deviances from parameters. We controlled for the effect of number of
the assumptions of normality, constant variance, and out- employees (a measure of firm-size) on our performance
liers, we proceeded to the assessment of our measurement measures. However, as the effect of this control variable
instrument for reliability, validity, as well as was found to be insignificant, we have reported the results
unidimensionality. after excluding it from the hypothesized model. The fit
Both EFA and CFA were used to assess convergent indices (Normed Chi square = 2.11; Normed Fit
validity and unidimensionality. As indicated earlier, we Index = 0.93; NNFI = 0.95; CFI = 0.96; RMSEA =
used different end points (scale anchors) for independent 0.07; Root Mean Squared Residual = 0.07) suggest that
and dependent indicators. Therefore, we had to use two the data fits our hypothesized model. While the path from
different measurement models for assessing the indepen- instrumental motivation to SSCM practices was found to
dent and dependent factors. During CFA, the constructs be not statistically significant (H1: b = 0.07, ns), the paths
were made scale-invariant by fixing one of the loadings in from relational motivation (H2: b = 0.15; p \ 0.05) and
each construct to 1 (Chen et al. 2004). The Eigen values moral motivation (H3: b = 0.54; p \ 0.01) to SSCM were
(all above 1.0) as well as factor loadings (all above 0.50) significant. In addition, SSCM also had a significant impact
from EFA suggest that our indicators exhibit convergent on environmental performance (H4: b = 0.68; p \ 0.01) as
validity (Hair et al. 1998). In addition, the model fit indices, well as financial performance (H5: b = 0.33; p \ 0.01).
standardized coefficients (all except one value above 0.50), Therefore, among the five hypotheses, only H1 was found
and t-values (all values significant at the 99 % confidence to be insignificant.
level) from CFA (Tables 2 and 3) suggest that our theo-
retical constructs exhibit convergent validity as well as Post-hoc Analysis
unidimensionality (Hu and Bentler 1999).
We assessed discriminant validity by comparing average To shed more light on our proposed model, we conducted
variance extracted (AVE) to the squared correlation multiple post hoc analyses. First, although we did not
between two constructs. As suggested by Fornell and forward a formal hypothesis for the mediating effect of
Larcker (1981), the AVE of the each pair of constructs SSCM, we conducted specific analyses since motivations
must be greater than their squared correlation. Comparing influence SSCM practices, which in turn affect perfor-
the correlation values given in Table 4 to the AVEs given mance measures. Second, to answer additional questions
in Tables 2 and 3 indicate that the requirements of dis- raised in the opening of the paper, we specifically tested to
criminant validity for all constructs are met. Finally, we see whether firms that are primarily driven by moral
assessed reliability using the composite reliability (CR) as motives performed better or worse than those that are
well as Cronbach’s Alpha values (Bagozzi and Yi 1988; highly motivated by instrumental and relational consider-
Nunnally and Bernstein 1994). As shown in Tables 2 and ations. These analyses along with their results are
3, all Cronbach Alpha and CR values, except those for explained below.
123
Table 4 Correlation between theoretical constructs

Factors Mean SD IM RM MM PD RD SSC DSC EP FP
Instrumental motives (IM) 2.99 0.84 1.00

Relational motives (RM) 3.70 0.93 0.25 1.00
Moral motives (MM) 4.08 0.80 0.15 0.39 1.00
Sustainable product design (PD) 3.58 0.82 0.06 0.27 0.45 1.00
Sustainable process design (RD) 3.25 0.96 0.12 0.25 0.51 0.60 1.00
Supply-side sustainability collaboration (SSC) 3.03 0.97 0.21 0.30 0.37 0.49 0.65 1.00
Demand-side sustainability collaboration (DSC) 3.37 1.00 0.13 0.36 0.47 0.43 0.58 0.64 1.00
Environmental performance (EP) 3.57 0.72 0.06 0.24 0.42 0.44 0.51 0.42 0.38 1.00
Financial performance (FP) 3.58 0.80 0.01 0.19 0.24 0.22 0.20 0.23 0.25 0.29 1.00
Mediation Effect of SSCM Table 5 Results of structural equation modeling based mediation
analysis
The approach suggested by James et al. (2006) was adopted Model 1a Model 2b Model 3c
to test the mediating role of SSCM (Paulraj et al. 2008).
We compared three models: (a) a full-mediation model Structural paths
(Model 1), (b) a partial mediation model (Model 2) that IM ? SSCM 0.07 0.09 –
includes direct paths from the three motivation factors to RM ? SSCM 0.15* 0.14? –
** **
the two performance factors, and (c) a direct model (Model MM ? SSCM 0.54 0.52 –
3) that only includes direct paths from the three motivation SSCM ? EP 0.68** 0.59** 0.59**
factors and SSCM to the two performance factors. As is SSCM ? FP 0.33** 0.23* 0.23*
evident from Table 5, Model 1 performs better than the IM ? EP – -0.07 -0.07
other two models in terms of AIC and CAIC values—lower IM ? FP – -0.08 -0.08
value is better (Akaike 1987; Bozdogan 1987). In addition, RM ? EP – 0.06 0.06
Model 1 has the highest percentage of significant paths, and RM ? FP – 0.07 0.07
the variance explained was comparable to the other models MM ? EP – 0.10 0.10
(Paulraj et al. 2008). Thus, these results suggest that Model MM ? FP – 0.11 0.11
1 is superior to Models 2 and 3. In addition, we further Model fit indices
checked whether SSCM partially or fully mediated the CFI 0.96 0.96 0.96
effect of the motivation factors on performance. Since the NFI 0.93 0.93 0.93
direct effect of instrumental motives on SSCM is not sig- NNFI 0.95 0.95 0.95
nificant, we could not specifically test for the mediating RMSEA 0.07 0.07 0.07
effect of SSCM on the relationship between instrumental PNFI 0.81 0.79 0.79
motives and performance factors. However, for relational AIC 575.59 576.07 576.07
motives, the direct paths to environmental performance CAIC 821.66 849.48 849.48
(b = 0.06, ns) and financial performance (b = 0.07, ns) Variance explained (R2)
were both found to be insignificant. Similarly, the direct EP 0.46 0.46 0.46
paths from moral motives to environmental performance FP 0.11 0.12 0.12
(b = 0.10, ns) and financial performance (b = 0.11, ns)
** t-values significant at p B 0.01; * t-values significant at p B 0.05;
were also insignificant. Based on these results, we can ?
t-values significant at p B 0.10
conclude that SSCM fully mediates the performance out- a
Hypothesized (full-mediation) model
comes of both relational and moral motives. b
Partial mediation model
c
Direct model
Performance Implications of Motivations
the 30th and 70th percentile for the summated scores of the
To test whether firms that are highly driven by moral three motivation factors. For each motivation, firms in the
motives performed better (or worse) than firms with high top 30 percentile were classified as high in that motivation
levels of instrumental and relational motives, we first found category while those in the low 30 and middle 40
123
percentiles were classified as low and medium, respec- Furthermore, the prevalence of the existing models look at
tively. We then selected two groups of firms: the first group the consequences rather than the antecedents of these
(Group 1: high in moral motivation) included firms in the responsible practices (Aguilera et al. 2007). By extending
top 30 percentile for moral motivation while simultane- prior qualitative research on motives, this empirical study
ously being in the low 30 percentile score on the other two therefore contributes to existing knowledge concerning
motivations. The second group (Group 2: high in instru- antecedents of SSCM practices and elucidates some
mental and/or relational motivation) included firms in the important insights to the business ethics literature. Given
top 30 percentile for instrumental and/or relational moti- that the preponderance of research on SSCM focus on the
vations and in the low 30 percentile for moral motivations. consequences of such activities, studying antecedents can
Among the 259 firms, only 30 firms fell in Group 1 while make a particularly valuable contribution to the literature
65 firms fell in Group 2. We compared these two groups and practices (Bronn and Vidaver-Cohen 2009). This study
using MANOVA with the three motivations, SSCM, and also responds to a call for a more robust framework that
performance factors as dependent variables. The MAN- incorporates morality-based, in addition to instrumental
OVA statistics (Pillai’s Trace = 0.60, Wilk’s and relational motives, as the organizational justice litera-
Lambda = 0.40, Hotelling Trace = 1.53, Roy’s Largest ture has recently experienced a move from instrumental
Root = 1.53) were all statistically significant at the 99.9 % focus to models that consider principled moral obligations
confidence level, indicating that factors representing to allow for simultaneous investigation of the complex
motivations, SSCM, and performance were all significantly network of factors (Cropanzano et al. 2003; Aguilera et al.
different across the two groups. As illustrated in Table 6, 2007).
the MANOVA F-test results suggest that all factors are CSR and business ethics researchers have theorized that
statistically different across the groups, although relational firms engage in responsible initiatives with diverse
motives were found to be insignificant. In general, these motives. Drawing on multiple theories, this study purported
results delineate that firms that are highly driven by moral that instrumental, relational, and moral motives can all
motivations perform better than those with high levels of drive firms to practice SSCM. The findings of significant
instrumental and/or relational motivations. relationships between relational motives and SSCM prac-
tices support utilitarianism and stakeholder theory, and
suggest that multiple stakeholders, including customers and
Discussion and Implications competitors, can be driving forces behind sustainability
practices such as SSCM. In addition, our results illustrate
This study contributes to and extends the growing research that many firms have strong moral motivations based on
stream of SSCM by merging it with business ethics deontological ethics and/or virtue ethics and are not pri-
research. In particular, it examined the relationships among marily driven by a self-serving or ethical egoism intention
corporate motives, sustainable supply-chain practices, and to practice SSCM. This marks an interesting contrast with a
firm performance. The findings of significant positive recent study, which found that its survey respondents
relationships between motives, practices, and performance considered moral motives less pertinent to their engage-
outcomes constitute an important contribution to the liter- ment in social initiatives, compared to motives related to
ature in SSCM. This study represents a unique treatment to strategic concerns (Bronn and Vidaver-Cohen 2009).
SSCM research in that most studies exploring these links While social desirability bias may exist with any self-re-
have been qualitative in nature and large-scale quantitative ported measures, such bias appeared to have little effect on
analyses remain very limited (Campbell 2007). our respondents, because of the fact that (1) the
Table 6 MANOVA results

Factors Average for GROUP 1 GROUP 2 F-value (probability)
entire sample High moral High instrumental ? relational
(n = 30) (n = 65)
Instrumental motives 3.18 2.64 3.43 21.02 (p \ 0.0001)

Relational motives 3.74 3.53 3.84 2.17 (ns)
Moral motives 4.12 4.81 3.80 62.19 (p \ 0.0001)
SSCM practices 3.40 3.72 3.25 11.54 (p \ 0.01)
Environmental performance 3.56 3.78 3.45 5.27 (p \ 0.05)
Financial performance 3.52 3.84 3.37 6.59 (p \ 0.05)
123
questionnaire was anonymous and survey respondents had capabilities are complex, socially created with suppliers
little incentive to portrait a more favorable picture than is and customers, path dependent, and difficult to imitate,
the case and (2) respondents were willing to admit a they can be a source of competitive advantage leading to
number of self-serving motives in their responses. Given improved firm performance. The findings of this study
that many environmental and social problems cannot be demonstrate that sustainable product design, process
solved through regulatory measures alone, it is very design, supply-side sustainability collaboration, and
encouraging to learn that the majority of the firms in our demand-side sustainability collaboration collectively play a
sample have gone beyond mere compliance with legal central role in enhancing a firm’s environmental and
obligations to engage in SSCM with strong moral motives. financial performance. Moreover, extant research investi-
More interestingly, our post hoc analyses reveal that firms gating the relationships between SSCM and financial per-
with high moral motivations or strong virtues perform formance has resulted in disparate and, to some extent,
better than those whose acts are primarily driven by contradictory findings with some advise that ‘‘it does pay to
instrumental and/or relational motivations. This finding be green’’ (e.g., Golicic and Smith 2013), while others
resonates with the limited empirical studies on moral maintain that SSCM practices may have uncertain or even
motives, which found that moral commitment induces a negative impacts on financial performance (e.g., Hahn et al.
stronger involvement in CSR and correlates highly with 2010; Winn et al. 2012). The results of this study provide
performance (Graafland and Van de Ven 2006; Fernando compelling empirical support that SSCM practices, whe-
and Almeida 2012). It also contributes empirical corrobo- ther driven by relational interests or moral motives, do
ration to the Positive Organization Scholarship (POS) lit- yield financial benefits.
erature by suggesting that organizational virtuousness is
positively associated with higher firm performance due to
the (1) amplifying attribute which can foster escalating
positive consequences and (2) buffering attribute which Conclusion
protects against negative encroachment (Cameron et al.
2004) Virtuous organizations strive to go beyond ‘‘do no Environmental responsibility and economic performance
harm’’ and pursue the highest aspirations for unconditional can often be at odds, due to greed or ignorance. Yet, firms
societal betterment (Bright et al. 2006). are increasingly integrating sustainability into their supply-
On the other hand, our hypothesized link between in- chain management practices. Organizations today know
strumental motives and SSCM practices (H1) was found to that all aspects of SSCM are a more important dimension
be insignificant. One reason for this non-finding might be of business than ever before, and are granting these matters
that the scales used for measuring this self-interest con- strategic attention. For example, recent allegations that
struct might be insufficient, as specified by the somewhat surfaced regarding the amount of toxic chemicals in its
low Cronbach alpha value. While this might be the case, a supply chain overseas have forced Apple, one of the most
more plausible explanation might be that while the desir- influential and profitable companies in the world, to take
ability and pervasiveness of the pursuit of self-interest is a the matters seriously by arranging for a number of audits
key belief and value underpinning American corporate and swiftly announcing the removal of two toxic chemicals
capitalism (George 2014), as is also evidenced by the fact from its supply chain. For many years, Apple shared very
that even research on CSR tends to search for the links little about its ‘‘secret’’ supply chain. The fact that it now
between CSR and firm performance (Campbell 2007; releases its Supplier Responsibility Progress Report, shares
McWilliams and Siegel 2011), this depiction is more rel- its supplier list, and gives environmental and social matters
evant to the U.S. than to European organizations (Meyer corporate priority speaks volumes. Although it is not clear
and Boxenbaum 2010). Another plausible explanation whether moral motives were behind Apple’s decision, it
could be that the decision makers might not realize that seems apparent that investors, customers, and media
SSCM practices can generate economic benefits. The reports and thus instrumental and relational motives (i.e.,
misperception can be attributed to the fact that these SSCM consequentialism) have played a pivotal role. Since com-
practices are new and thus awareness of their effectiveness plying with norms reflects the ‘‘lowest common denomi-
might be lacking. In the absence of strong instrumental nator’’ for less-unsustainable practices, and becoming
interests, it appears that moral motives can serve as a more, or truly, sustainable business calls for ‘‘moral
robust driving force for firms to embrace SSCM practices. goodness’’ that voluntarily exceeds institutionalized nor-
In the extant literature, researchers have argued how mative expectations (Walls and Hoffman 2013), this study
SSCM practices, including product and process innova- has made a convincing case for morality-based SSCM
tions and collaboration with supply-chain partners can practices. Moreover, it bestows a concrete empirical sup-
become a set of dynamic capabilities. Since these port for a recent research arguing that moral obligation for
123
green management is absolute, and whether it ‘‘pays’’ to be advantage can be considered an instrumental motive. Thus,
green is only partly relevant (Marcus and Fremeth 2009). we encourage future researchers to work to refine this
Findings of this study contribute to multiple literature potentially ‘‘muddy’’ scale. In addition, SSCM practices is
researches espousing corporate sustainability and business inherently a multidimensional construct and we had
ethics. This research reveals that moral motives can be a selected four most influential first order factors of sus-
much stronger driver than instrumental motives, and that tainable product design, process design, supply-side col-
firms exhibiting a high level of moral concerns for the laboration, and demand-side collaboration to underpin the
environment tend to outperform those mainly driven by construct. Factors focusing on other aspects of sustain-
amoral considerations. Grounded in deontological ethics ability such as logistics and distribution can be incorpo-
and virtue ethics, morality-based SSCM practices and rated to more fully capture the SSCM practices construct.
financial performance are not mutually exclusive. Rather, Furthermore, this study focused on the environmental
they can be ‘‘complementary’’ in that firms can ‘‘do well by aspect of SSCM practices, future research can incorporate
doing good.’’ Moreover, since ethical compliance is a social issues in the conceptualization of SSCM.
moral minimum, virtuous organizations emphasize nur- Another limitation of this research concerns the sample
turing moral development and ethical strength to ensure population. While this study sample covered a wide range
that they not only prevent unethical actions, but also pro- of firms in various industries, it was drawn from the Dun &
mote virtuous behaviors (Sekerka et al. 2014). Having a Bradstreet database of firms in Germany. It would be
clearer understanding of why companies practice SSCM interesting to find out if firms in the U.S., where the ide-
adds significantly to our knowledge of how to better ology of American corporate capitalism (ACC) fosters and
advance corporate sustainability. Managerially, our find- encourages self-interest and consumption (George 2014),
ings provide additional insights into how companies would rank instrumental motives higher and moral motives
respond to changes in the external environments and thus lower in their drive to practice SSCM. Moreover, since the
can help policymakers, managers, stakeholders, and conceptualization and practices of SSCM as well as moral
scholars develop more robust strategies for encouraging theory are highly contextually and culturally dependent,
businesses to engage in environmentally responsible prac- existing theoretical concepts, constructs, and measurements
tices (Bronn and Vidaver-Cohen 2009). Academically, this developed primarily based on research conducted in
study helps provide a research framework for developing industrialized Western countries may not be readily
theory about what drives firms to engage in SSCM, how applicable to other parts of the world. It would be helpful to
corporations may respond differently to institutional pres- conduct a similar study in other regions such as (1) Asian
sures for acting responsibly, and whether such sustainable countries that are currently experiencing the bulk of the
practices can enhance a firm’s environmental and financial manufacturing boom and making a profound impact on the
performances. The provision is timely and of paramount global ecological system, and (2) Latin America where
importance because the reason why scholars, managers, companies might have different perceptions of SSCM
and companies today do not agree on the conceptual con- practices due to limited knowledge and/or resources.
nections among drivers of sustainability and SCM has been Additional analyses can be conducted to determine if
attributed to insufficient theory (Markman and Krause motives and SSCM practices vary with firm size across
2014). industries and manager profiles. Notwithstanding these
Despite the considerable contributions stated above, it is limitations, this study paves the way for managers and
essential to acknowledge limitations of our study that researchers to better understand what motivates firms to
might provide opportunities for future research. Two of the engage in SSCM practices and the differential effects on
five scale items for the instrumental motives construct were performance outcomes.
eliminated during the instrument development process and
the construct ended with a lower than expected Cronbach’s
alpha value. Future research can improve it and consider
adding new indicators to more completely tap the con-
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J Bus Ethics (2017) 145:239–258

Motives and Performance Outcomes of Sustainable Supply Chain

Conceptual Model and Hypotheses Instrumental Motives and SSCM Practices

Sustainable Sustainable Supply-side Demand-side

Fig. 1 A proposed model of SSCM motives and performance

Measures Nonresponse Bias

Table 2 Measurement model for motives and SSCM factors

Instrumental motives (Eigen value = 1.85; a = 0.63; CR = 0.66; AVE = 0.42)

Table 3 Measurement model for performance factors

Environmental performance (Eigen value = 3.48; a = 0.85; CR = 0.86; AVE = 0.52)

Table 4 Correlation between theoretical constructs

Instrumental motives (IM) 2.99 0.84 1.00

Table 6 MANOVA results

Instrumental motives 3.18 2.64 3.43 21.02 (p \ 0.0001)

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